Elliott also said it had seen a significant groundswell of dissatisfaction among BHP shareholders because of the company's chronic underperformance, and accused its board of not being open to suggestions and misleading in its response to the original proposals.
But Elliott still says BHP is a chronic underperformer and must spin off its US oil business and adopt a consistent plan of buying back shares.
These include further cost cuts to support a 10% increase in its value and a US$5bn investment in latent capacity across the portfolio, which Mackenzie said could add more than 20% to current production at an average return of 75%.
Activist investor Elliott Associates has claimed "extremely broad and deep-rooted" support for BHP Billiton to review its petroleum arm, as it ramps up its public campaign to force change.
"Substantial advances in the operating capability and capital productivity of our shale assets continue to lower drilling and completion costs, supporting returns on invested capital in excess of 30% on incremental investments", Mackenzie said.
BHP Billiton Plc is a global resources company.
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Analysts at Deutsche Bank and Citi have said BHP could unleash billions of dollars by selling part or all of its petroleum business, although Citi cautioned this would bring only a one-off benefit to shareholders and the company should focus on how to grow value for shareholders. BHP would also change its logo, he said.
BHP chief executive Andrew Mackenzie will pitch his defence against activist investor Elliott directly to Australian shareholders next week, as the company seeks to maximise the value of its United States shale assets before any potential sale or demerger.
Mackenzie outlined BHP's plans, which he argues could lift the value of the company by 50% and double its return on capital.
In its letter, Elliott also shifted a push for BHP to spin off its US oil and gas assets, which include activities in the Gulf of Mexico and vast onshore shale acreage.
Major growth projects valued at up to US$25 billion offer potential average returns of over 16 per cent at consensus prices.
Studies on the Olympic Dam expansion "are progressing well".
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Such a buyback, if the current valuation remained unchanged, would lead to $2.4 billion in value accretion, equivalent to more than 12 times Elliott's expected costs of unifying BHP's dual listings, it said. It's because BHP's petroleum business looks well suited to a spinoff, and the more BHP resists, the more attractive its oil wells become.
The problem for Mackenzie is turning rhetoric into reality. Other large or well-known targets of Elliott Management have been Samsung, Mentor Graphics, Cognizant Technology, Qlik, Riverbed, Informatica, LifeLock and more.
Elliott instead said BHP's management should work harder to find a solution to the legacy structure.
Shares of BHP Billiton plc (LON:BLT) traded up 0.71% during mid-day trading on Tuesday, hitting GBX 1199.00.
A number of equities analysts have recently commented on BBL shares.
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